In a Constitution Bench ruling delivered on 30 April 2025, the Supreme Court of India in Gayatri Balasamy vs. ISG Novasoft Technologies Limited [Civil Appeal Nos. of 2025 (@ SLP (C) Nos. 15336–15337 of 2021)] held by 4:1 majority that Article 142 of the Constitution may be invoked by the Court to modify an arbitral award, but only in limited circumstances and with caution. The majority judgment, authored by Chief Justice Sanjiv Khanna and comprising Justices B.R. Gavai, Sanjay Kumar, and Augustine George Masih, affirmed that while Article 142 provides a constitutional power to do “complete justice”, it cannot be exercised in contravention of the Arbitration and Conciliation Act, 1996. Justice K.V. Viswanathan, however, dissented on the issue of applicability of Article 142 to modify arbitral awards.
Background of the Case:
The matter originated from divergent judicial interpretations on whether Indian courts have the jurisdiction to modify arbitral awards under the Arbitration and Conciliation Act, 1996. The three-judge Bench, recognising the legal conflict, referred five questions of law to a Constitution Bench for authoritative determination, including whether such modification could be made under Article 142 of the Constitution.
The questions included:
“Whether the powers of the Court under Sections 34 and 37 of the Arbitration and Conciliation Act 1996 will include the power to modify an arbitral award?”
and
“Whether the power to set aside an award under Section 34 of the Act, being a larger power, will include the power to modify an arbitral award and if so, to what extent?”
Supreme Court’s Majority View on Article 142 Power:
In examining its own powers under Article 142, the majority judgment acknowledged that the Court has invoked this provision in prior cases to alter interest rates in arbitral awards to avoid prolonged litigation. The Court discussed its use in McDermott International Inc. v. Burn Standard Co. Ltd. and Ssangyong Engineering and Construction Co. Ltd. v. NHAI, where relief was granted under Article 142.
However, the Bench clarified the boundaries of this constitutional authority:
“As far as the applicability of Article 142 of the Constitution is concerned, this power is to be exercised by this Court with great care and caution.”
It further explained that:
“Article 142 enables the Court to do complete justice in any cause or matter pending before it. The exercise of this power has to be in consonance with the fundamental principles and objectives behind the 1996 Act and not in derogation or in suppression thereof.”
Referring to the Constitution Bench ruling in Shilpa Sailesh v. Varun Sreenivasan [(2023) 14 SCC 231], the Court quoted:
“…the plenary and conscientious power conferred on this Court under Article 142(1) of the Constitution of India, seemingly unhindered, is tempered or bounded by restraint, which must be exercised based on fundamental considerations of general and specific public policy.”
It added that:
“Fundamental general conditions of public policy refer to the fundamental rights, secularism, federalism, and other basic features of the Constitution of India.”
Importantly, the majority concluded:
“While exercising power under Article 142, this Court must be conscious of the aforesaid dictum. In our opinion, the power should not be exercised where the effect of the order passed by the court would be to rewrite the award or modify the award on merits. However, the power can be exercised where it is required and necessary to bring the litigation or dispute to an end.”
Dissenting Opinion of Justice K.V. Viswanathan:
Justice K.V. Viswanathan, dissenting from the majority on the applicability of Article 142 to arbitral award modification, held that such power could not be used to rewrite or alter the terms of an arbitral award. He emphasised the sanctity of the limited judicial interference envisaged under the Arbitration and Conciliation Act, 1996, and cautioned against expanding Article 142 to confer substantive powers inconsistent with the statutory scheme.
Conclusion:
The Constitution Bench, by a 4:1 majority, held that the Supreme Court may invoke Article 142 to modify an arbitral award, but such exercise must be exceptional and aimed solely at ending prolonged litigation or doing complete justice, without breaching the statutory scheme.
The Court formally stated:
“Article 142 of the Constitution applies, albeit, the power must be exercised with great care and caution and within the limits of the constitutional power as outlined in Part XII of our Analysis.”
Thus, while Article 142 grants the Supreme Court a unique constitutional tool, its use to modify arbitral awards remains narrowly tailored and subject to strict judicial restraint, with Justice Viswanathan expressing a principled dissent against such invocation.
